Lucara Diamond will be able to carry out the completion of its flagship project in Botswana after it received a commitment letter from The Bank of Nova Scotia (Scotiabank) for a multi million Pula revolving term credit facility.
Scotiabank is one of North America’s premier financial institutions and the most international of Canadian banks.
The US$25 million (P180 million) two year facility will help Lucara towards the commissioning of the Karowe Mine, the TSX Exchange, NASDAQ OMX First North and BSE listed company said.
The company praised the confidence the lenders had on the project at a time when there are no new mines coming on stream.
“We are very pleased to have secured this credit facility which clearly demonstrates the sound rating of the Karowe diamond mine and the excellent progress of the development and construction work to date,” Lucara Diamond Chief Executive Officer William Lamb said.
“The facility provides the flexibility to fully commission Karowe and lead other corporate initiatives while avoiding shareholder dilution. We can now focus 100 percent on commissioning activities at Karowe as we bring this exciting project into production,” he added.
Karowe well known as AK6 is at advanced stage of production, but its advancement was hard hit by the industrial action in South Africa last year affecting the delivery of necessary materials.
The developers of the mine had indicated that it could be running at full production by March this year.
Lucara said the facility will contain financial and non-financial covenants customary for a facility of this size and nature.
The applicable interest rate of any loan under the facility will be determined by the Company’s leverage ratio at any given time. The availability of the facility is subject to the completion of final documentation and customary conditions precedent.
The two year facility will be secured by the assets of the Company and certain of its subsidiaries. Up to US$15 million dollars may be advanced prior to the delivery of security over the Company’s Karowe assets.
Lucara is a well positioned emerging new diamond producer. The Company has an experienced board and management team with years of diamond development expertise.
The Company’s two key assets are the Karowe diamond mine in Botswana and the Mothae diamond mine in Lesotho. The 100 percent owned Karowe Mine is in the construction stage with mine commissioning scheduled to commence in the first quarter of 2012. The 75 percent owned Mothae mine is currently in the trial mining stage.
Both Mothae and Karowe are large scale assets with tonnage and throughput upside; diamond values from both could significantly increase with the continued recovery of Type IIA and large stones.
